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Albanese Govt to make unfair contract terms illegal so SMBs are not exploited by large companies

Through lockdowns, bushfires and floods, Scott Morrison has failed to provide leadership and ease the anxiety felt by many small business owners across Australia.

Hard-working small businesses have been struggling with unpredictable cash flow, staff shortages and complex regulation, all while worrying about being pushed around by big firms.

After nearly a decade of Liberal government, there is still no law to protect small businesses from larger partners who force them to accept unfair terms.

An Albanese Labor Government will provide meaningful protection for small businesses, contractors and smaller scale suppliers to shield them from exploitation. We will protect small businesses from unfair contract terms so the sector can grow with confidence.

Why do we need this?

Currently, if a term in a contract signed by a small business is found to be unfair by a court or tribunal,  the clause will be void and the small business will no longer be required to comply with it.

But there are no rules against including unfair terms in the first place, and no penalties when they’re discovered.

Seeking to have a term voided can be a drawn out and costly process, and court or tribunal decisions do not have any flow on effect that voids other uses of the same contract terms.

Under the rules as they stand, the Australian Competition and Consumer Commission can’t issue civil pecuniary penalties against businesses imposing unfair contract terms, and too few small businesses are protected by the rules.

There has been bipartisan agreement on how to fix this problem for more than two years, but the Liberals let Australia’s small businesses down badly by not bringing the necessary laws to Parliament until it was too late to pass them.

For the Morrison Government, fixing this problem was just another promise and delivery didn’t matter. But Labor knows this does matter, and that when large contractors, landlords and suppliers lock smaller players into unfair agreements, it is bad for business and highly distressing for small business people.

Australian small and family businesses have had enough of Morrison’s bad faith politics. An Albanese government will deliver the protection they need.

What will Labor do?

An Albanese Labor Government will make unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners.

Despite repeated calls from Labor and the small business community, Scott Morrison has failed to improve the existing protections, which simply aren’t strong enough to deter wrongdoing. The Liberals have left small businesses vulnerable to agreements with drawn out payment times and unfair pricing.

Labor would make unfair contract terms illegal, giving businesses with fewer than 100 staff or a turnover of less than $10 million a real shield against dodgy contracts.

Once dodgy contracts are against the law, the competition watchdog will be able to issue civil penalties against those who use them.

It will also mean that a contract term which is judged to be unfair will effectively be banned from that point on and will be void anywhere it’s been used.

Labor has been calling for this action for years, and we took a commitment to fix this problem to the 2019 election.

The Liberals have shown they can’t be trusted to prioritise the needs of small business, but owners and workers in small businesses can rest assured that an Albanese Labor Government will get this done.

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